February 26, 2013

Unions Postpone Labor Action at Brazilian Ports until March 15

Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.

After a series of mini strikes at various Brazilian ports last week, all further labor action at the ports has been postponed until March 15th. After meeting with government officials last Friday, the labor unions decided to suspend any further work stoppages and in exchange, the government has agreed to meet with union officials to discuss their concerns and to not levy a R$ 200,000 fine for the mini strikes, which the government considers illegal.

The unions are concerned that the government's plan to privatize the Brazilian ports will lead to fewer jobs, lower wages, and deteriorating working conditions. The Minister of Ports, Leonidas Cristino, has agreed to meet with the workers about their concerns, but he has stated repeatedly that the privatization plan will continue to move forward. He feels that the plan is essential to improving efficiency at the ports and thus lowering the costs of moving products through the ports.

This is a nervous time at Brazilian ports. The world is waiting for Brazil's super-sized soybean crop to come onto the market and help relieve tight supplies, but many are worried that labor disputes may disrupt port operations in Brazil.

At the same time, an extra high number of vessels have already arrived at Brazilian ports in anticipation of loading the 2012/13 soybean crop. At the Port of Paranagua for example, as of late last week, there was already 90 vessels waiting to load compared to 31 vessels last year at this time. At the Port of Santos there was 59 grain vessels waiting to load compared to 29 last year. The wait times are soaring as well and it will get much worse especially if there are labor strikes or even work slowdowns. These long waiting times (as much as 40 days) has already drove export business back to the U.S. at a time when Brazil should be the only export game in town.

Not only are there problems at the ports, there are also problems getting the newly harvested soybeans to the ports. Recent heavy rains in central Brazil have resulted in very poor road conditions. This is causing a lot of problems on BR-163 which is the major highway in and out of the state of Mato Grosso. The potholes are so bad along sections of the highway that numerous accidents involving grain trucks and automobiles have been reported in recent weeks. Every week, there is at least one grain truck that rolls over in an attempt to avoid the potholes and the trucks are forced to travel at reduced speeds due to the poor conditions. Just last week alone, there were four people killed in separate accidents on BR-163 in central Mato Grosso

The situation has gotten so bad that the Commercial Association of Sorriso (ACES), which is located along BR-163 in central Mato Grosso, in conjunction with 15 other associations in central and northern Mato Grosso, called for a protest demonstration to shut down the highway on March 12th to emphasize the poor condition of the highway. They want the potholes to be fixed immediately and the federal government to commit to long term improvements of the highway. The state government has said that they will start fixing the potholes as quickly as the weather will permit.